In recent decades, state pension funds across the country have shifted to more complex investments with greater exposure to financial market volatility.

Also in our State and Local Daily Digest: Is Edwards using tactics from Jindal’s Louisiana budget playbook; N.J. county distributes potassium-iodide pills; a blueprint for a city-county consolidation in Upstate N.Y.

Houston owes its police, fire, and city workers about $7.8 billion, and it doesn’t exactly have the cash on hand. Their hard-fought solution could serve as a model for the rest of Texas, and the nation.